Cayman Islands leaders are seeking silver linings amid global political and economic turmoil following Britain’s decision to leave the European Union.
Friday’s Brexit referendum result immediately led to the resignation of British Prime Minister David Cameron and saw financial markets tumble, while the pound plunged to a 30-year low against the US dollar.
The result has already led to calls for a second referendum on Scottish independence, as leaders across Europe brace for a period of prolonged political uncertainty.
In the Cayman Islands, the decision could impact citizens’ ability to live, study, work and travel freely within the European Union. There is also expected to be some impact on the financial services sector, although business leaders said it was too early to tell whether the changing landscape was a threat or a deterrent. opportunity for the territory.
Cayman Islands Premier Alden McLaughlin, in a speech to the Legislative Assembly on Friday afternoon, said the decision had repercussions far beyond UK shores.
He said the Cayman Islands had benefited from Britain’s relationship with the EU, particularly through the freedom of movement for citizens of overseas territories. He predicted the prospect of new governments in the UK and US would spell a time of “great uncertainty” for global politics, including for Cayman.
But he said the island could thrive amid the turmoil.
“In this sea of uncertainty, Cayman is an increasingly attractive place to live, work, invest and do business.
“The Cayman Islands government’s healthy financial position and the growing strength of our economy make us an excellent option for businesses and investors looking for a safe haven amid the current political and economic turmoil.”
Jude Scott, the chief executive of Cayman Finance, said in a statement on Friday that the industry would do its part to ensure the success and stability of the global financial economy in a time of uncertainty.
He said: “In the short term, we will see some volatility in the financial markets, but we will continue to monitor the political and economic situation and plan for the long term to ensure that we are well prepared for all the implications of this decision. over the next few years. .”
Independent lawmaker Winston Connolly said the full impact of Britain’s exit from Europe remained to be seen. But he suggested there was an opportunity for Cayman in the fallout to lure wealthy people to the island.
“A number of people will be uncertain and looking for certainty and Cayman should take this opportunity to provide that for them. This is an incredible opportunity to grow our economy,” he said.
The timing of Britain’s withdrawal from the European Union and the shape of any future relationship between the country and its continental neighbors have yet to be established. Some forecasts suggest that the implementation of a new formula could take more than two years, raising fears of prolonged uncertainty in financial markets.
Mr Cameron will formally step down from the leadership in October with former London mayor and leading Brexit campaigner Boris Johnson early favorites to replace him.
Mr McLaughlin said he would meet other Overseas Territories leaders and speak to Overseas Territories Minister James Duddridge in the coming months to get a clearer picture of the likely impact of decision.
“It is too early to make any predictions or to be able to say what the full impact of the furlough decision will be. But it will certainly be profound. This will impact not only the UK and its citizens residing there, but also overseas territories, Crown dependencies and even the rest of the world.
Tim Ridley, former chairman of the Cayman Islands Monetary Authority, said the UK’s decision to leave the EU was “puzzling and senseless”.
He added: ‘The ‘daddy’s army’ brigade, still dreaming of the days of the Empire, and malcontents in general have most likely and irresponsibly thrown away Britain’s youth and future over a cliff. They could come to regret their votes in the next few years. Similarly, the EU may come to regret the loss of the enormous stability and influence that the UK has brought to the table. The only thing certain right now is uncertainty.
He said the two key issues in any future negotiations between the UK and Europe were trade and financial services and freedom of movement, both of which are likely to impact Cayman.
“Any limitations on the ability of UK passport holders to study, work and travel freely in the EU will have a similar impact on Caymanians who hold full UK passports. This could be a significant downside. It certainly concerns me a great deal.
“Caiman has already encountered difficulties in offering its financial products and services in the EU, for example obtaining a passport for Cayman funds. These difficulties will be much greater with the UK outside the EU. On the other hand, the UK and the Cayman Islands will have greater freedom to maintain and develop their tax and regulatory regimes without the heavy hand of Brussels hanging over them. The UK will benefit from much greater flexibility in its relationship with the Cayman Islands, particularly in relation to financial services and our regulatory regime. It could be a very significant advantage, but it depends a lot on the British approach.
Nicholas Dixey, a British lawyer with Nelson and Company in Grand Cayman, said the reality of Britain’s exit would take some time to sink in.
“No one really believed this was going to happen. Many Britons who voted ‘stay’ are currently feeling sad, anxious and bewildered by the outcome. While many who voted ‘leave’ are delighted, many also fear for the outcome. ‘to come up.
“As the dust settles, Britain now has a real opportunity to reach out to European partners and advocate for a new, leaner and more flexible Europe of vibrant sovereign nations working together in friendly solidarity.
“We don’t need an overbearing unelected European Commission to impose laws and regulations for mutual success, or sing ‘Ode to Joy’ together. Only by empowering citizens and rebuilding and strengthening the relationship between voters and their representatives can the darker rising forces of fascism be defeated.